# Australia drops landmark criminal cartel case against Citi, Deutsche
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-02-11
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: Australia drops cartel lawsuit against Citigroup, Deutsche Bank, and executives - Reuters
Meta Description: Australia withdrew a $1.8 billion cartel lawsuit against Citigroup Inc, Deutsche Bank AG, and former executives, citing lack of reasonable prospects of
URL: https://financedigest.com/australia-drops-landmark-criminal-cartel-case-against-citi-deutschehtml

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By Byron Kaye and Scott Murdoch

SYDNEY (Reuters) -Australia on Friday withdrew a cartel lawsuit against Citigroup Inc, Deutsche Bank AG and four former executives over a $1.8 billion share issue, a stunning retreat from what would have been the country’s biggest white-collar criminal trial.

After nearly four years of pre-trial hearings in packed courtrooms, federal prosecutors said they had pulled the case after reviewing the evidence and concluding “there were no longer reasonable prospects of conviction”.

The scope of the lawsuit had narrowed in recent months with prosecutors already having dropped charges against the former [head of Citi in Australia](https://www.financedigest.com/worldpay-heads-down-under-with-australia-licence.html "Worldpay heads down under with Australia licence"), the client for the stock issue in question, Australia and New Zealand Banking Group Ltd, and ANZ’s former treasurer.

The move ends a potentially far-reaching challenge to the way [investment banks jointly underwrite capital raisings](https://www.financedigest.com/5-tips-for-raising-investment-as-a-start-up.html "5 tips for raising investment as a start-up") and removes the threat of jail for the former bank executives. It also [raises anew questions of whether](https://www.financedigest.com/graphic-chip-price-drop-raises-questions-on-whether-end-of-shortage-is-in-sight.html "Graphic chip price drop raises questions on whether end of shortage is in sight") Australian authorities had overstepped.

The banks had been charged with “cartel conduct” that carried the potential for steep fines and [prison terms of up to 10 years](https://www.financedigest.com/belarus-sentences-in-absentia-former-olympian-herasimenia-to-12-years-in-prison-belta.html "Belarus sentences in absentia former Olympian Herasimenia to 12 years in prison – BelTA"). The matter came at the height of the [Australian public’s backlash against what was seen as an unscrupulous banking](https://www.financedigest.com/barclays-gets-australian-banking-licence-in-expansion-push.html "Barclays gets Australian banking licence in expansion push") sector.

A REGULATOR’S SETBACK

At the heart of the case were [conference calls soon after the 2015 stock issue in which the banks discussed that they were left holding](https://www.financedigest.com/5-top-tips-when-holding-a-crisis-press-conference.html "5 Top Tips When Holding a Crisis Press Conference") unissued shares. Their staff were heard [saying they would withhold selling the shares](https://www.financedigest.com/saipem-shares-drop-group-says-cannot-explain-why.html "Saipem shares drop, group says cannot explain why") to prevent a flood of new stock hitting the market which would have sent the price down.

We have always [maintained that our bank](https://www.financedigest.com/how-traditional-bank-and-insurance-cfos-can-maintain-pace-in-a-disruptive-digital-first-marketplace.html "How traditional bank and insurance CFOs can maintain pace in a disruptive, digital-first marketplace") and our staff … acted responsibly, in the interests of clients and in a manner consistent with all rules and [regulations,” Deutsche Bank](https://www.financedigest.com/austrian-regulator-orders-system-relevant-banks-to-up-capital-buffers.html "Austrian regulator orders system-relevant banks to up capital buffers") said in a statement.

Michael Richardson, Deutsche’s Australia head of equity capital markets from 2008 to 2017 and one of the individual defendants in the case, said he welcomed the decision but added: “I will never get [back the last four years of my life.”](https://www.financedigest.com/trump-charges-bring-new-york-zombie-case-back-to-life.html "Trump charges bring New York ‘zombie case’ back to life")

It has had an enormous impact on me, my [business career and my family and I struggle](https://www.financedigest.com/pakistan-floods-add-to-pain-for-struggling-small-businesses.html "Pakistan floods add to pain for struggling small businesses") to understand why I have been put through this ordeal,” he said in a statement. I am looking forward to throwing myself fully [back into my business](https://www.financedigest.com/improve-your-business-while-saving-the-planet-and-your-back-with-easycat.html "Improve your business while saving the planet and your back with EasyCat") career without the distraction and disruption of this matter.

Citi said it had “steadfastly denied the allegations and is looking [forward to putting](https://www.financedigest.com/putting-your-right-foot-forward-the-secret-of-successful-retail-bank-footprints-is-in-the-data.html "Putting your right foot forward – the secret of successful retail bank footprints is in the data") this matter behind us.

ANZ did not respond to requests for comment. When it was removed from the case in October, it said it had always acted lawfully.

JPMorgan Chase & Co was also on the conference calls. On [legal advice](https://www.financedigest.com/some-credit-suisse-at1-bondholders-seek-legal-advice-law-firms.html "Some Credit Suisse AT1 bondholders seek legal advice -law firms"), it notified regulators about a potential perception of collusion in exchange for immunity from prosecution, its former staff said in hearings, adding that they never viewed the discussions as improper.

Representatives for JPMorgan were not immediately available for comment.

The decision is an embarrassing setback for the Australian [Competition and Consumer](https://www.financedigest.com/tesco-reported-to-competition-watchdog-by-consumer-group-over-pricing-concerns.html "Tesco reported to competition watchdog by consumer group over pricing concerns") Commission (ACCC) which first referred the matter to prosecutors.

The antitrust regulator would have had a stronger impact if it had demanded public undertakings from the banks about measures to prevent price-fixing and provided new guidelines for [share underwriting](https://www.financedigest.com/monte-dei-paschi-to-have-underwriting-consortium-for-share-sale-by-tuesday-source.html "Monte dei Paschi to have underwriting consortium for share sale by Tuesday – source"), said Rob Nicholls, an associate professor in regulation and governance at the University of New South Wales who has worked at the ACCC.

Perhaps it was a stretch at the [beginning but it looks like even more of a fall at the end](https://www.financedigest.com/where-does-your-travel-policy-end-and-gadget-insurance-begin.html "Where does your travel policy end and gadget insurance begin?"). The outcome of this process is: ‘oh well, they couldn’t get the prosecution up, so why on earth would we change what we’ve been doing before?'” he said.

ACCC chair Rod Sims said in a statement that he respected the prosecutors’ decision and “with them will consider what [lessons can be learnt](https://www.financedigest.com/lessons-learnt-what-financial-technologies-will-survive-post-covid.html "Lessons learnt: What financial technologies will survive post-COVID?") from this matter.

(Reporting by Byron Kaye and Scott Murdoch in Sydney with additional reporting by Harish Sridharan in Bengaluru; Editing by Gerry Doyle and Edwina Gibbs)


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